Friday, March 29, 2013

Historical Returns for the S&P 400 Midcap Index (Updated Through 2012)

The S&P 400 Midcap Index is the most widely-followed U.S. Midcap stock market index.  This index was first introduced in June 1991.  I have previously posted charts with annual returns through 2007, 2008, 2009, 2010, and 2011. The chart below shows calendar-year returns between 1992 and 2012 (click on the chart for a larger view).  The chart below also shows five-year annualized returns, starting with the fifth full calendar year of the existence of the S&P 400 Midcap Index (i.e., 1996),  ten-year annualized returns, and fifteen-year annualized returns.

As illustrated, the S&P 400 Midcap Index rebounded in 2012 from a down year in 2011, rising about 17.88%.  The annualized return of the Index from 1992-2012 was about 11.28%, the 5-year annualized return through 2012 was about 5.15%, the 10-year annualized return through 2012 were about 10.53%, and the 15-year annualized return were about 9.14%. The total return (including reinvested dividends) between December 31, 1991 and December 31, 2012 was about 842.87%.

I am a fan of midcap stocks and recommend that any long-term investor seriously consider investing money in midcap stocks, such as those tracking the S&P 400 Midcap Index (e.g., the Midcap SPDR ETF (symbol: MDY) tracks the S&P 400 Midcap Index). Midcaps tend to provide higher returns over time than large cap stocks, such as those comprising the S&P 500 Index, although such stocks are generally more volatile over shorter time periods.

** I have posted an updated chart for the period between 1992-2014.

Saturday, March 02, 2013

Historical Annual Returns for the S&P 500 Index - Updated Through 2012

2012 was a good rebound year for practically all U.S. equity indexes, including the S&P 500 Index, which had a total return of about 16.0%.   The market was driven higher as a result of somewhat improved economic growth as well as currency devaluation caused by the Federal Reserve pumping money into the U.S. economy. 

Standard & Poor's introduced its first stock market index in 1923 and created the S&P 500 Index in 1957.  The charts below (click on individual charts for a larger view) show annual total returns for the S&P 500 Index (and its predecessor S&P 90 Index) between 1926 and 2012.  The annualized return for the S&P 500 Index (and its predecessor S&P 90 Index) between 1926 and 2012 was about 9.84%.  The 5-year annualized return through the end of 2012 was about 1.66%, one of the worst 5-year annualized returns shown on the charts below, although it is an improvement over the -0.25% 5-year annualized return through 2011.  The 10-year annualized return through 2012 was about 7.10%, a major improvement over the weak 2.92% returns recorded in the 10-year period ending in 2011.

According to the Wall Street Journal, as of March 1, 2013, the P/E ratio of the S&P 500 Index based on estimated earnings over the next 12 months is approximately 13.68. As I have previously discussed, the average P/E ratio of the S&P 500 Index and other large caps stocks has been around 16 based on data dating back to the 1800s, so the S&P 500 Index may have some room to grow again in 2013 if the economy continued to strengthen. As of March 1, 2013 the S&P 500 Index (including reinvested dividends) is up about 6.86% so far this year.









I have posted an updated chart for the returns of the S&P 500 Index during the period between 1926-2015.